Historically, nursing homes predominantly provided custodial care to a long-stay, chronically ill population. However, a series of policy changes greatly expanded the post-acute, Medicare-financed side of the market. The Centers for Medicare &Medicaid Services also introduced a national nursing home report card initiative with the intention of using market incentives to improve sector performance. Medicare's entry into this market presents an opportunity to address the long-standing issue of low quality among the chronic care nursing home population. Despite important differences in the needs of chronic and post-acute nursing home populations, quality of care within a facility has characteristics of a public good shared across all residents. The central implication of this observation is that Medicare resources and policies directed at improving care for Medicare residents may spillover to other residents. This project develops and applies a framework for evaluating the implications of Medicare's increasing involvement in this market. The following specific aims are proposed: 1. To quantify the impact of Medicare payment policy and report card efforts on post-acute Medicare nursing home utilization and illness severity using national facility-level Online Survey, Certification and Reporting (OSCAR) data for the period 1996-2005. 2. To quantify the impact of Medicare payment policy and report card efforts on post-acute and custodial quality indicators (e.g., restraint use;pressure ulcers) using national 1999-2005 Minimum Data Set assessments and regulatory deficiencies and staffing using the OSCAR data. 3. To apply the findings from Aims 1 and 2 to derive key policy tradeoffs related to Medicare payment and quality reporting policies. Using facility-level microsimulation analyses in 5 states, characterize Medicare's influence on quality for Medicare and other residents through its payment and reporting policies. Significance: By examining the link between post-acute Medicare nursing home policy and outcomes of care for the custodial nursing home population, this study provides an opportunity to improve the quality of care for the millions of Americans receiving care in the nursing home setting. This study will also provide nursing home researchers with a new framework for jointly analyzing the provision of post-acute and chronic nursing home services. Thus, the information derived from this study has the potential to make important research and policy-relevant contributions aimed at improving the quality of care for all nursing home residents.